Alitalia could be grounded in three days

22 September 2008

Alitalia has been dealt a further blow after Italy’s civil aviation authority ENAC says it will withdraw the struggling airline’s operating licence this week unless it comes up with a cost-cutting rescue plan.ENAC’s president Vito Riggio said, “If the financial plan doesn’t arrive in three to four days the licence will be suspended,” he said.

ENAC is meeting the troubled airline’s special administrator today.

The airline continues to lose potential passengers due to fears over its future, worsening its already-desperate cash flow situation. It is losing an estimated 2m euros per day.

On Friday it cancelled a number of flights from its Rome hub, stoking fears it has run out of cash to buy aviation fuel. However Alitalia denied the claim and instead blamed its cancellation of some 30 flights on “technical issues”.

Italian Prime Minister Silvio Berlusconi is under pressure to bail out the airline after the investor group he has been backing withdrew their bid.

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CAI, led by Piaggio Chairman Roberto Colaninno, pulled out of talks to take over the bankrupt Italian national carrier after six out of nine unions rejected its proposals.

These would have led to around 3,000 job cuts and employees forced to work more hours for the same pay. Unions argued that the job cuts were higher because thousands of part-time and temporary workers will be cut. The unions, representing most of the 7,000 pilots and cabin crew, continued to seek concessions until a deadline for a decision expired yesterday.

“We may be on the edge of the abyss,” Berlusconi said last week after news that CAI had withdrawn its bid. Berlusconi’s, just four months in his new premiership, meets with his cabinet in Rome today to discuss Alitalia.

Alitalia would become the first major European flagship airline to collapse since Swissair Group and Sabena of Belgium in 2001. It filed for insolvency on August 29 to allow the state-backed rescue to begin.——-